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MGT301

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Critical Thinking

Ethical Perspectives

Theories Models and Analogies

MANAGERIAL DECISION-MAKING: CRITICAL THINKING

Rationality in decision-making implies the use of logic, meaning that conclusions are draw from a well reasoned and supported argument. This rational process in decision-making is termed "critical thinking" or "informal logic". The teaching objective is that the student will understand how a well-reasoned argument is constructed and have a basic understanding of the fallacies of an argument. The importance of this is to be able to diagnose the strengths and weaknesses of reasoning even when this might mean recognizing that our own arguments are weak and opposing arguments are strong, and to help the student understand when the strength an argument should influence a decision, regardless of one's own position. This skill will be developed by introducing the student with the fundamental vocabulary and the structure of a well-reasoned statement, examining some of the typical fallacies in logic, looking at its application to more complex argument, and use of this knowledge in writing and critiquing an argument.

BASICS OF LOGIC

Our thinking about logical decision-making is grounded in the ancient philosophers. To Plato, the "truth" is "out-there", available to those who seek it. Truth is absolute, unchanging, and independent of our seeking and imagining of what "it" is. To Plato the process of seeking truth depended upon deduction - taking a known general truth and reasoning from it another, more specific truth. Aristotle, too, saw the truth as something available to us, but the process of discovery relied on induction - a specific and observable fact is examined and from this observation inferences can be drawn about a more general truth.

An Example of Deduction:

The Law of Supply states that when supply increases, prices fall.
Therefore, if OPEC produces more oil, the price of oil will fall.

An Example of Induction:

OPEC observed that when it increased production of oil, prices fell.
Therefore, when supply increases prices fall.

Both logical tools, deduction and induction, can be used to construct an explanation of the relationships between price and supply. But, note that deductive arguments rely upon the truth of the Law of Supply. If true, the deductive argument could be used to predict price for any economic good. Deductive thinking, properly used, should produce right conclusions because we are arguing from the general case to a specific example of the general case. With inductive logic, however, the attempt is to construct a general explanation based on a specific case. The conclusions, therefore, may not be exact and are, therefore, conclusions that are likely to be true simply because we are not considering each and every possible case.

Management theories help us to reason deductively. A good theory can be applied to a set of facts to determine appropriate actions or decisions. The outcome, of course, will depend upon how good the theory is and the appropriateness of its application. When we have no theory to guide us, inductive reasoning helps to establish an explanation for a set of facts, but we cannot be sure that the explanation is correct for similar kinds of cases.

What makes a well-reasoned explanation is how the problem is constructed. To examine the structure of a logical explanation, we need to introduce a few terms:

Argument - An argument is a set of statements that attempt to convince us of a conclusion.

Statements or propositions - A statement is a declarative sentence. It can be true or false.

Critical thinking requires that we understand that statements in an argument may not be truthful - we will delve into what is "truth" later. An explanation can be "logical" or well reasoned, but be based on lies or, simply, incorrect information. What makes an argument "well reasoned" is that is structured properly, meaning within the statements offered, the conclusion follows. It is also true that explanations that are not logical, nevertheless, can be "truthful".

Premise - Deductive arguments always require a core assumption, a premise.

In my deductive argument, I assumed that the Law of Supply is true. This premise is required to apply a general explanation that I assume to be correct to a set of specific facts. Critical thinking requires that in a deductive argument that the premise be clearly stated. We do this in conversation by prefacing such an argument with words like "Assume…", "If…. ", or "Since….". A premise can be the conclusion of a previous logical argument. For example:

Arguing inductively:

I observed that every time I kicked the ball, it always fell to earth.
Therefore, when things go up they come back down.

This conclusion now becomes the premise for the deductive argument:

The law is that objects propelled upward will eventually fall. (Newton's Law)
If I kick this ball, it will fall to earth.

Inference - A step-by-step process linking statements to the conclusion.

Here the word "inference" is the logical process itself. In inference once the premise or other statement is accepted, this statement is used to develop a new statement. Inference gives logic its familiar structure. In conversation, we often preface inferences with words like "therefore …" or "… implies that ….". Like premises, inference may not be "valid". For example:

Valid inference:

If I were a Chief Executive Officer I could make important decisions.
I am a CEO.
Therefore, I make important decisions.

Invalid inference:

If I were a Chief Executive Officer I could make important decisions.
I make important decisions.
Therefore, I am a CEO.

Conclusion - This is the statement that the argument attempts to establish.
The conclusion is the result of the final step of inference. It's only a conclusion in the context of a particular argument; it could be a premise or assumption in another argument.

Sound Argument - An argument is sound when it (a) follows a valid argument form (inference), and (b) has only true premises.

An Example of an Argument with a Valid Inference, but False Premise:

I am either the CEO of a Fortune 500 company, or I am independently wealthy. (False premise)
I am not independently wealthy. (Premise)
Therefore, I am the CEO of a Fortune 500 company. (Invalid conclusion)

Regrettably, the premise is not truthful. I am neither the CEO of a Fortune 500 company nor independently wealthy, therefore the conclusion is not correct..

It is also possible to present false statements, but develop valid inferences, and arrive at a valid conclusion:

All CEOs work hard. (Assumed premise)
I am a CEO. (False premise)
I work hard. (Valid conclusion)

If the premises are true, and the inferences are valid, the conclusion cannot be false. This is the test of a sound argument.

The following table summarizes the test for a sound argument. The symbol "" designates that the conclusion B is logically inferred by premise A.

Identifying an argument is not always easy. If I make the pronouncement "Adam Smith is the Father of Modern Capitalism." This is not an argument; it is a statement, which may be truthful or false. Similarly, "My product is the best thing you could ever buy!" is also just a statement, you may believe it or not. These statements contain no information to verify their soundness. We often, especially in casual conversation, try to make appeals to others by making these kinds of declarative statements - sometimes with raised and an enthusiastic voice. Critical thinking should inform us that this kind of statement is not an appeal to reason.

Fallacies - In logic a fallacy is more than a mistaken belief, it is a flaw in the argument. Fallacies can be created intentionally because a person has an agenda or can be created by simple error.
Because a fallacy is not a sound argument, critical thinking requires that we be cautious of arguments that attempt to persuade us to an action or belief that intuitively is uncomfortable. A sound argument should persuade, but a persuasive person is not the same as a sound argument.

There are a large number of logical fallacies - too many to deal with here. Below are some that we frequently encounter:

Anecdotal evidence - This is using one observation to prove the general case. For example, "Students who take this course succeed in business. I recall one student who was making six figures within five years." This is the criticism of many inductive arguments. Statistics instructs us to use larger samples to represent the whole population.

Argumentum Ad Hominem ("argument against the man")- Attacking a person's character instead of the content of that person's argument detracts from the business of analyzing the argument. For example, "Bob is an alcoholic, so don't take his investment advice too seriously." "Of course Jones would argue against lowering prices, he is in sales, after all." The character of someone is information you might want to consider, but it has nothing to do with the reasonableness of what the person says. For this, we must critically examine what is stated.

Argument From Ignorance - When you cannot prove something is false, you conclude that it must be true. Or, you conclude that something is false, because you cannot prove it is true. For example: "Since OJ cannot show that he is innocent, he must be guilty." "Since you cannot prove that product will be successful, we should not bring it to market." If we do not know something, we do not know it. Even a well developed logical statement cannot help.

Appeal To Authority - This is an appeal to a popular figure who is not an authority in that area. For example, "Bart Simpson likes Butterfinger candy bars, so they must be good." There are several related kinds of fallacies, such as appealing to popular opinion ("Every freedom loving American will want to support this."), appealing for pity ("Don't hang the man who killed his wife, his children are motherless and need him."), and appeal to force ("If you don't belief this, you'll die.").

Begging the Question - Typically this means that dubious statements are used to prove a dubious conclusion. Indirectly, the conclusion is also the premise. For example: "People are only motivated by more pay. We will pay our workers more to motive them." This is similar to "loaded" questions, in which the question presupposes an answer to a question that has not been asked or demonstrated. For example, "When did you stop beating your wife?"

Bifurcation - Also referred to as the "black and white" fallacy or casually as "take it, or leave it", bifurcation occurs if someone presents a situation as having only two alternatives, where in fact other alternatives exist or can exist. For example: "Because I am good with people, my career will either be personnel management or pubic relations."

Circular Reasoning - A very common fallacy in which the conclusion is also assumed as a premise. This occurs when we have reached a conclusion and use this conclusion as the explanation. For example, "You should buy my product because it is the best there is. People of your status buy the best and my product is the best there is."

Non Sequitur ("does not follow") - This is drawing a conclusion that does not follow from the evidence. For example: "I made a 'C-' in that professor's class, he does not know what he's talking about." "This month Microsoft reported lower profits. The software market must be really competitive."

Red Herring - This is a diversion from the main argument by introducing irrelevant material. "You may claim that the death penalty is an ineffective deterrent against crime -- but what about the victims of crime? How do you think surviving family members feel when they see the man who murdered their son kept in prison at their expense? Is it right that they should pay for their son's murderer to be fed and housed?"

Straw Man - It's is easier to defeat a man made of straw and it is easier to misrepresent someone else's position and attack the misrepresentation. The straw man fallacy concludes that the original argument has been defeated, though it has not been considered. For example: "You tell me you're sure that you'll make a  good manager working here. To be absolutely sure you should have examined all the possible alternatives, which you did not do. Therefore, I am not convinced that you'll make it here." The "straw man" is attacking the level of the candidate's "being sure" when the candidate's proposition is "will make a good manager here."

Sweeping Generalization - A general rule is applied to a situation in which the general rule does not apply. For example, "Managers typically make a lot of money. You are a manager, so you must make a lot of money."